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Sacramento Republic, once a slam dunk for MLS expansion, now in danger

An ownership dispute at Sacramento Republic has put the city's bid to join MLS in jeopardy.

What once looked like a slam dunk MLS expansion bid for Sacramento now looks to be in jeopardy.

When Sacramento presented its bid to be an MLS expansion franchise on Jan. 31, the name of the club that has led its drive to join MLS -- Sacramento Republic -- was conspicuously absent.

That was by no means the only curious development on the day. Earlier Tuesday, it was announced that HP Enterprise CEO Meg Whitman had been added to the expansion effort's ownership group. Yet the Republic were caught flat-footed by the announcement. One would have thought a press release would have been forthcoming from the club, but one never appeared, even on the club's website. A press release instead emerged from an entity calling itself Sac Soccer & Entertainment Holdings.

Sacramento Republic finally issued a statement Wednesday, and it confirmed that not all is well within the expansion bid team.

"We are just as surprised as our fans to hear that various news outlets are reporting that a bid was submitted to MLS for Sacramento which does not reference Sacramento Republic FC," the statement read. "If these reports are true, this is deeply troubling to us. This journey has always been an endeavor to elevate your team, Sacramento Republic FC, to MLS. If the bid submitted yesterday by Mr. [lead investor Kevin] Nagle did not include Sacramento Republic FC, it was in violation of our agreements and without our authorization, and we will take this up with the appropriate parties immediately. We want to thank all of Sacramento Republic FC's fans for your continued support. This is, and always will be, your team."

One theory circulating is that SS&EH managing partner Nagle is somehow divorcing himself from the club that has been at the forefront of all that is good about Sacramento's expansion story. This includes the club's success at USL level as well as the impressive crowds that saw the club average 11,514 fans last season, the second-highest mark in the league.

As it turns out, it's much more complicated than that. The issue is that there are two distinct business entities involved. The first is the club, Sacramento Republic FC. Contrary to published reports, multiple sources stated that while Nagle is a "large investor" in SRFC, he doesn't have a controlling interest. The controlling interest lies with team president and founder Warren Smith.

The other entity is the aforementioned Sac Soccer & Entertainment Holdings. It is this entity that Nagle controls, and according to the sources, this is also the entity into which Whitman, San Francisco 49ers CEO Jed York and the Sacramento Kings have invested. Perhaps more importantly, the plan for a stadium -- already approved by the city of Sacramento -- and the corporate support that has been directed toward that effort are tied up with SS&EH.

Throughout Sacramento's expansion effort, the two sides have projected a united front, including the effort to finalize a stadium plan. It was done with the understanding that Nagle would handle the MLS bid, while Smith would focus on running SRFC. Essentially, what is happening now is that for months, the two entities have been engaged in talks to merge, and they are haggling over the price.

The hope had been that a deal would be completed prior to the Jan. 31 filing deadline for MLS expansion candidates. One wasn't, so it was SS&EH representative Kunal Merchant who presented the bid book to MLS executive vice president Mark Abbott, and there was no mention of Sacramento Republic FC. A source close to Nagle added that SRFC didn't give permission to SS&EH to use their name or logo in the bid book. But with the deadline looming, the bid had to be submitted, so it was done without any reference to SRFC.

"My preference would be to keep the Republic name," Nagle told the Sacramento Bee.

Does a merger have to happen? Technically, no.

Nagle could conceivably carry on without SRFC's help or input. But that would mean starting a club from scratch, and Sacramento's expansion story is tightly linked to the success of the Republic. It is the club into which fans have invested their emotions and dollars, as opposed to a nebulous corporate entity. But if MLS is the ultimate goal, SRFC will need the deep pockets of Nagle and the ownership group he has cobbled together to get there. A common ground will likely need to be reached for the bid to be successful.

On Wednesday, Nagle later released a statement that read, "Our pursuit of MLS has, is, and will always be driven by our respect for the fans, and love for Sacramento. In that pursuit, we submitted a compelling application to the league [Tuesday] that clearly outlines the three necessary components for supporting a team: a viable stadium plan, a credible ownership group and a proven market.

"We have the utmost respect for SRFC and firmly believe that we further strengthen our case by presenting a united front with them. We have always been and are committed to finalizing a compelling partnership and we will work with all parties in good faith to ensure this happens. Most importantly, we are confident that these factors will result in Sacramento being awarded the MLS expansion team that it deserves. The fans have earned it. And we will not rest until that happens."

The timing couldn't be worse. The competition for the four available expansion slots -- two to be decided in the second or third quarter of 2017, the other two at a date to be determined -- is fierce. Other cities such as San Diego and St. Louis have compelling stories to tell. It seems highly unlikely that MLS will put two more teams in California, given its desire to expand its geographic footprint into heretofore under-served areas such as the southeastern portion of the U.S.

Is it possible that a merge could still be completed? Of course, and Sacramento Mayor Darrell Steinberg issued a statement of his own indicating he would sit down with both sides to try to hammer out a resolution. Perhaps with his help the considerable friction that has built up between the two sides can be overcome.

Jeff Carlisle covers MLS and the U.S. national team for ESPN FC. Follow him on Twitter @JeffreyCarlisle.

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